Currently, the business-to-business (B2B) market is exploding. The primary attraction and allure of B2B lies in its potential for enabling a large number of highly automated low-cost transactions to be conducted on a regular basis with multiple trading partners. Ideally, the B2B model attempts to eliminate any form of human interaction in order to reduce costs while, at the same time, increasing the speed and efficiency of executing transactions.
Although the B2B approach appears to address many of the problems inherent to conducting business, there still remain several issues which need to be resolved for B2B to truly excel. One problem is that current markets only offer limited liquidity. The current market place today usually gives buyers and sellers limited capabilities. Buyers and sellers have limited access to each other, typically contingent upon what resources are available to explore marketplace options. If machine transactions do occur, this only happens among the largest companies with established business relationships. Thus, by the nature of the structure of today's B2B technology, buyers and sellers are limited to fully explore efficient market transaction choices.
Another problem is that current B2B exchanges do not have an integrated communications solution to utilize human decision making. The supply chain velocity today is often hindered by poor communication between buyers and sellers. Little to no focus has been paid to human intervention automation. In the past, human elimination was the goal. However, in actuality, buying agents and procurement engineers spend most of their day trying to reach individuals. Furthermore, before a transaction is executed, buyers and sellers work to negotiate their own criteria for a purchase/sale. However, current B2B exchanges do not offer a method to complete this critical business process of matching the criteria of buyers and sellers within an exchange setting.
Furthermore, markets often experience supply shortages or excesses. The potential for extreme volatility in the market (in terms such as price, quantity, delivery date, etc.) exists and poses an inherent risk. Again, this risk is exacerbated by poor communication between buyers and suppliers, or by a poor view of the market to truly determine an effective purchasing/sale strategy. These disadvantages contribute real market inefficiencies and costly purchasing mistakes.
Yet another drawback is that there typically is no mechanism for market participants to develop deeper business relations within today's B2B exchange setting. While exchanges are excellent methods to match buyers and suppliers together, such structures currently have no way to enable both parties to develop a deeper business relationship with each other. The process towards executing an agreement may be long and complex. As these matches occur within the setting of a B2B exchange, the ability to develop a better understanding of each other's requirements becomes curtailed without a way to enable both parties to communicate effectively with each other. Thus, once buyers and suppliers have found each other, there is no ready way to pull away from the exchange to better understand each other's terms and conditions for a longer lasting business relationship.